Lesson 2A-Objectives

After completing this lesson, students should be able to:

1.  Compare the taxation of business income and business owners for businesses operating as C Corporations, S Corporations and Sole Proprietorships.

2.  Describe the short term and long term tax advantages and disadvantages of doing business as a C corporation, an S corporation or a sole proprietorship.

3.  Describe and explain the requirements that must be met for a corporation to elect subchapter S status.

4.  Describe, understand and compute adjustments to stock basis necessary to reflect income or loss of S Corporations.

5.  Compare and contrast the tax consequences of a sale of stock of a C corporation vs an S corporation.

6.  Describe the current general planning strategy for C corporations that minimizes the combined tax liability of the corporation and the shareholder(s).